Community Housing Gets Nothing For $83 Million: BENN
Did Ottawa Community Housing Corporation just spend $83 million to shuffle some decks chairs? It sure looks that way.
The city is purchasing 311 townhomes in the near west end. These townhomes are somewhere between 50 and 60 years old. The concept, per the city, is to add to the city’s portfolio of affordable housing units. But adding to the city’s portfolio of older townhome is not adding to the number of affordable housing units in the city. It is merely shifting existing affordable housing units from a Minto operated entity to the Ottawa Community Housing. No net new additions.
I am familiar with the units on Tanglewood Drive, near Merivale Road. The better part of four decades ago my wife and I purchased our first home at the other end of Tanglewood. Same builder, same vintage, same basic floor plan. After just a decade or so, that unit needed a fair amount of maintenance. Not upgrades, just maintenance. Repair this. Fix that. Standard home ownership stuff.
And what is Ottawa Community Housing Corporation noted for? The inability to maintain its own portfolio of rental units. Report after report after report tells the same story. Inadequate regular maintenance has led to the point where major repairs are required. Except, precious few of those major repairs have taken place. Why? High on the list is the lack of funding in the city’s deficit ridden operating budget. Yes, deficit ridden. Because when the city regularly raids the operating reserves, it means that, without the leger du main that passes for city accounting methodologies, the budget is not actually balanced. But enough about recent, or not so recent, history, other than to say that the inventory of affordable housing units that are not likely to get sufficient maintenance funding just increased by 311.
The point is and remains, these 311 units were already priced as affordable housing. Spending $83 million doesn’t change that. What that $83 million doesn’t purchase is more affordable housing units.
What if he city spent that same $83 million on new affordable housing units? On land already owned by the city? Who knows, perhaps even on land owned by the city that is near an LRT station? Such as Bayview Yard.
With no incremental land costs, that $83 million could be used to add about 300 new affordable housing units. Three hundred more units, to help address the backlog of 12,000 people. At four people per unit, that would provide affordable housing for about 10 per cent of that backlog.
That would be a net gain. It would put a dent in the growing problem that is the lack of affordable housing. What it would not be is the mere shuffling of the deck chairs.
Ron Benn, a finance executive, has been a member of the Centrepointe Community Association for the better part of three decades.
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While not withstanding OCH’s difficulties in maintaining its existing housing stock, I think that the premise behind OCH’s purchase of Minto housing was to insure that it is maintained as affordable housing. While we need more affordable housing in Ottawa there is also concern that much of the privately held affordable housing that we have is being lost to renovation and renoviction so the prevailing wisdom is that while new affordable housing would be great, not losing what we have is also very helpful. Now all of this presupposes that Minto was looking at either selling these properties or was planning to significantly upgrade them and raise the prices. Do we know this to be the case? If Minto was going to keep them at the same affordable price point, then perhaps not much was achieved. The City paid $267,000 per townhouse. It is highly unlikely that they could ever build new townhouses this cheaply even if they did it on their own land. There may be method in their madness but it is understandable how difficult it is to give the City the benefit of the doubt since there is just usually just madness in their madness (ex: Lansdowne, LRT).
Lorne, one of my concerns with these townhomes is that they are five to six decades old. The city’s comment that they were well maintained should be viewed as a relative term, with the relativity being compared to city owned homes.
Is the reason Minto chose to sell these homes to the city at what appears to be a significant discount because they require significant updates to key components? Components like the furnace, water heater, windows, roof, insulation, outside cladding?
Ron Benn is correct, the city doesn’t get anything from this deal except 311 housing units that require maintenance. Minto’s REIT gets to unload 311 housing units before they have to start investing in repairs using shareholder dividends.
Minto is clearly the winner here.
The question the city has to ask is was Minto actively looking to sell on an open market, or was this a backroom deal brokered by recent OHC Foundation board member Jim Watson and Minto, one of his longtime developer buddies?